January 2021 Portfolio Update

I'm so glad that we've made it into a new year. Finally there's some light on the horizon, with people being vaccinated at quite a pace, although it's hard to remain positive with this lockdown grinding on. Add on concerns around the economic damage that we're accruing, sabre-rattling from China over Taiwan and a sense that this bull-market is ready to pop and I can see why investors feel nervous. I mean when a bunch of chatroom investors can bring short-selling hedge-funds to their knees you've got to wonder whether we're on the cusp of a market collapse. Personally I think that markets are just taking a breather, having got ahead of themselves, and that near-term news is much more likely to be positive rather than negative. After all millions of people are getting vaccinated, there's an adult in the White House who wants to support the economy and soon it'll be Spring and the sun will be shining.

The downside of starting another year is that your YTD performance gets reset to zero and you can easily end up negative rather than positive. Fortunately January has been kind and, while I've given quite a few percent back in the last week, my portfolio is up 4.6%. Online gaming drove most of this gain with BOTB, GMR and GAN benefiting from the gradual opening up of states in the US and/or a ready audience of gamblers with time on their hands. SLP also stepped up to the plate as increasing PGM prices focused investors attention on just how cheap SLP still is.

On the flipside half of my shares fell over the month, at mostly single-digit levels, for no obvious reason beyond profit taking. In fact some of the fallers announced outstanding, or ahead of expectation, trading figures and still they got sold off. The most painful fallers were GAW, where I suspect the Buffettology Fund to be reducing again, and BUR. I've no idea why Burford has pulled back so much except that it remains unloved. It's likely to be a beneficiary of the lockdown, with cases being deferred rather than cancelled, but no one seems interested. That probably means that now would be good time to buy.

Risers: BOTB 38%, GMR 38%, SLP 16%, GAN 16%, BLV 13%, TSTL 12%, AFX 12%, SCT 10%, RWS 10%, SPSY 5%, VLX 5%, DX. 4%, LUCE 2%, TM17 1%

Fallers: BOO -1%, KNOS -1%, K3C -1%, GAMA -3%, FNX -3%, CCC -4%, DRV -6%, TND -6%, PLUS -7%, GAW -8%, CMCL -8%, BUR -13%


Staffline Group Bought at 64p

It's often said that recruiters are first to fall in a recession and then the first to rise afterwards. Intellectually this makes sense in that recruitment, and advertising, are costs that can be cut quickly when sales flag although they cannot be held low indefinitely. This was certainly the case in 2020 with UK recruiters such as Robert Walters, Page Group and Hays suffering steep declines in Net Fee Income. Things hadn't improved much by the late Autumn but the rate of fall looked to be reducing. Still investors remain wary and the share prices of these companies have essentially flat-lined since March. Now Staffline have performed similarly but on top of this self-inflicted problems have cratered the share price by over 90% in the last two years. In many ways the company looks like a basket case but new management have recently joined and will have no compunction in ditching profitless operations (such as the Apprenticeships business of PeoplePlus). Combine this changing of the guard with a bombed-out share price and economic recovery and I can see plenty of upside. Other investors seem to feel the same way with the price racing through resistance at 50p. With a trading update due shortly we'll soon discover whether our optimism is to be rewarded.

Sylvania Platinum Bought at 90p

Share price momentum has been strong at Sylvania Platinum in the last six months with the price doubling. Despite this the rating is still cheap at under 6x EPS for 2021 as the company benefits from PGM prices rising. Tied into this the company is generating high levels of cash and has stated that a special dividend will be paid out of excess cash. If analysts are correct this payout could be equal to a 15% yield which would be astonishing. There are clear risks of course around volatility in PGM prices, the known lifespan of chrome dumps and arisings and economic conditions within South Africa. Still the directors have guided the company very ably over the last five years and I like the operational plans that they are pursuing. So I put in a cheeky order as the price briefly consolidated and luckily for me it got filled on intraday volatility.

DX Group Bought at 32p

Another company with strong momentum is DX Group with the price doubling since November. I think that investor interest has been stimulated by continued director buying combined with a very positive AGM statement. This indicated that despite being just a few months into the new financial year the company was on track to perform materially better than current market expectations. Key to this performance is that both divisions are growing and margins are improving in DX Freight. Very much a continuation of the plan that management have followed over the last three years. Sadly I didn't top-up after the AGM but as buying pressure continued I realised that if I wanted to make DX a full position in the portfolio then I needed to act. The problem was finding a price that I was happy to pay. A few weeks ago I almost bought at around 28p but bottled it for some reason. Then the price moved away again and I decided that I would definitely purchase in the next period of consolidation. To achieve this I left a limit order open in the market and saw it taken out a few days ago. Sometimes this is the best way to trade when liquidity is limited and it's hard to get an online quote from your broker. The next update is due in February and hopefully Brexit hasn't disrupted the business to any significant extent (which it shouldn't as DX is a national rather than an international business).

Best of the Best Bought at 1645p

Further down I cover the outstanding H1 results delivered by Best of the Best. Just skimming the numbers it was obvious that the price would leap upwards when the market opened because analyst forecasts were so far behind the curve. I had no idea where the price would end up but I knew that I had to try and pick up some more shares. So at 7.59am I was ready to buy what I could with the funds that I had available. For once my broker was able to offer a quote at just a few seconds past 8am and I took all that I could. A lucky purchase for sure but I think that Best of the Best has a lot more growth to offer investors (if it doesn't get bought out at a bargain price which is unlikely given the concentrated shareholder base).

Gaming Realms Bought at 31p

An investment here is a bet on Slingo continuing do well in the USA as more states open up to online gaming. Right now Slingo games are licensed in the regulated New Jersey market which has almost doubled year-on-year. Remarkably the company has a 3.5% share of total gross gaming revenues. At the time of the last interim results the board had applied to be licensed in Pennsylvania and Michigan with further states following in due course. So when the company announced that they had been granted a provisional license in Michigan the share price took off like a scalded cat. This makes sense as the company is rewarded on the performance of its games with customers and every new regulated market delivers more potential customers (and Michigan is the tenth largest state in the US). In retrospect this is obviously great news but I wasn't prepared to chase the share price as it almost doubled in the three days after the announcement. Fortunately the shares have come back a bit and seem to be consolidating at around 31p - which is why I've added to my holding at this level. There's no fundamental justification for this being the "right" price but we know for sure that more states will allow regulated gaming and there's no reason to believe that Gaming Realms won't benefit from this regulatory process.

Gear4music Bought at 888p

I've felt negative about Gear4music for quite a few years now. It listed five years ago and went ballistic in 2017 as profits jumped by almost 500%. An incredible step-change and some people made a lot of money. However the business couldn't cope with this growth and crashed back to Earth over the next two years. This consigned it to my "flash in the pan" bucket. However - and this is the key point - management learnt from this near-death experience and have spent the last couple of years turning Gear4music into a sustainable business. Happily for the board this recovery coincided with a global pandemic and a huge surge in demand for online retailers. As a result Gear4music have issued four "ahead of expectations" trading updates in the last year. That is truly remarkable but still I ignored the progress being made. Only with the last update, a few days ago, did I change my mind for a couple of reasons. Firstly sales growth and improving margins have worked together to ensure that FY21 results will be ahead of recently upgraded consensus market expectations. Secondly the board have planned for Brexit changes and scaled up their European hub to deal with the challenges. Thirdly the share price has broken through the previous ATH of 870p, on high volume, and doesn't look like it's going to fall back. So all of the indicators are positive for the company and I've taken an initial position.

Best of the Best Bought at 2200p

After reading through the interim results in more detail I've come to the conclusion that Best of the Best is being mispriced at the moment. After a stunning H1 it's clear that the current broker forecasts are nonsense. The question isn't whether BOTB will beat the forecast of 69.8p; it's by how much it will be beaten. I don't think it's much of a stretch to say that earnings for the full-year should be at least 100p with a decent shot at 120p. This puts the forecast P/E ratio at 18-22 which doesn't feel extreme for an online-only business growing at such a clip. The sales process remains a distraction but I don't see management selling out at a bargain level when the business is throwing off so much cash (which they can pay out as dividends). So I've added another 25% to make this the second largest holding in my portfolio.

Kainos Group Bought at 1278p

With an ahead of expectations announcement in the public domain I've decided to bump up my initial purchase position. My thinking here is around portfolio management in that I want to reward my winners and cut the losers. From this perspective Kainos, as a business, has done incredibly well over the past year and this momentum is being maintained. I also think that a consistent track-record of delivery means that they'll be first in line to pick up new contracts within their area of expertise. So while this is a fairly new holding for me, and the rating is pretty aggressive, I'm happy enough to pay up in the belief that future earnings upgrades will drive the share price upwards.

Belvoir Group Bought at 177p

I really like the management at Belvoir and over the past year they've demonstrated their ability to deliver in the most testing circumstances. This isn't a mega-growth stock, in a hot sector, so I'm not expecting to see the share price double any time soon. Instead it's a consistently profitable, highly cash-generative, low capex business which satisfies its customers through highly motivated franchisees. This is a great model when it's done well and I have no doubt that Belvoir delivers on this front. Nevertheless the share price is below where it was a year ago despite the company beating their pre-Covid expectations. To me this suggests that investors are concerned about the rest of the year (since sales transactions could contract when the stamp duty holiday ends) while also being behind the curve. My perspective is that the board have a solid track-record of dealing with whatever hand they are dealt and this is one of the qualities that I value most. Hence I've added another third to my holding to make Belvoir a top-ten position.


Property Franchise Group Sold at 188p - 0.1% gain

I bought into The Property Franchise Group back in August as a pair trade with Belvoir. Both operate in the area of property letting using a franchise network and both are subject to the same macroeconomic forces. However since then their fortunes have diverged with BLV rising 25% while TPFG has basically flat-lined. There's no obvious reason for the discrepancy except that the management at Belvoir are more proactive about speaking to investors and there's a lot more liquidity in their shares. Side by side their financial metrics are very similar although Belvoir has better analyst coverage in that the forecasts are updated regularly while The Property Franchise Group appears to have basically no coverage. So it could be sailing under the radar? Either way I don't need two identical shares in the same sector and I have more interesting places to put these funds. So it's out.

LoopUp Group Sold at 81p - 52.9% loss

This was definitely my disaster share for 2020 in that I could easily have sold out for a decent profit and yet now I've ended up with a thumping loss. There were a couple of problems in my execution here. One was that I looked at the astonishing performance in H1 and extrapolated it forwards. The broker wasn't fooled, because they predicted a much lower FY result, but I assumed that I knew better and that the forecasts would inevitably get updated. In reality the massive Spring spike in business evaporated over the Summer and LoopUp failed to capitalise on their opportunity. My second error was that then the price flat-lined after its massive rise, and failed to break-out on positive news, I dismissed the actions of other investors. In reality they sold into any positive momentum and took their money off the table. Looking forwards there are some positive elements to LoopUp with their Microsoft Teams integration but it's going to take time to rebuild investor confidence. This implies that there are other, better places to recover my loss and so I've bailed out of LoopUp.

Calnex Solutions Sold at 121p - 43.9% gain

My belief in Calnex remains undimmed at the present time. However this is a very new listing, which means that we don't have much history to go on, and the price feels very up with events. So I think that it's reasonable to remain cautious about how the share will perform in the near-term. As a result, and because I'd like to deploy some funds elsewhere, I've decided to take the profit and run. This is the downside of being pretty much fully invested at all times; you have to sell something to buy elsewhere. The upside is that in a bull-market you benefit from the rising tide that lifts valuations across the board. I may well return to Calnex in the future if the price stagnates and the business continues to perform strongly.

Tatton Asset Management Sold at 286p - 2.0% loss

For most of my time as a private investor I've been a proponent of diversification. Having a wide spread of positions has saved my bacon on many occasions. The downside is that outstanding performance by a few holdings tends to be diluted by other holdings treading water. The upshot is that if you want to see material portfolio gains then you need some degree of concentration. I'm never going to be one of those people who can put 20-30% (or more) into a single company but I can stomach 10% in a proven position which means that I need to aim for around 20 holdings. As a consequence I'm trying to be more active in dropping companies which aren't really going anywhere and don't have a clear catalyst for re-rating. Tatton Asset Management is one such company. I like management and their plans for growth but investors don't seem very interested in the story and the share price is pretty moribund. So I've cut it at just less than breakeven for reinvestment elsewhere.

Codemasters Group Sold at 601p - 56.9% gain

I've retained my holding in Codemasters through all of the takeover volatility in the view that it's not over until the fat lady sings. Also the initial approach from Take-Two was set at an embarrassing level and the board should be ashamed to have backed it. Fortunately Electronic Arts came through with a decent counter-offer at 605p and the price reacted positively by shooting up to 650-660p. I continued to hold on the basis that Codemasters retains unique IP and that there really isn't an alternative if you want to add racing games to your roster. Unfortunately Take-Two decided not to engage in a bidding war and the price has fallen back. That's life. I have no problem taking my holding until the bitter end but I believe that there's more upside in using my stake to initiate holdings elsewhere. So the position has been sold at a small discount to the offer price.


Caledonia Mining Corporation

A solid update which reconfirms that the Central Shaft will be commissioned in Q1 with a very beneficial impact on production. At the same time capex has now fallen away releasing cash for increasing dividend payments. In fact this is the fourth increase in the last five quarters which is remarkable. This is simply a well run company which is now able to invest in new projects in areas where gold mining has been successful in the past. At current prices this remains worth buying if you're interested in gold miners. (Update)


The good news is that with the seasonally important December trading period behind them Softcat is significantly ahead of where they expected to be at this stage. That's very positive even if H2 is hard to forecast. The principal difficulty is that corporate clients are taking a mixed approach. Some are pursuing large projects while others are more cautious. Fortunately the public sector remains strong and Softcat is in a good position to meet any challenges. It all bodes well as the economy looks forward to recovering when the pandemic has been controlled. (Update)


It's hardly news that Plus500 has done tremendously well out of the market volatility in 2020. As expected the year delivered record revenues and profits which will drive a handsome dividend payout. What is interesting is that the board upped their marketing budget in Q4. According to the board this investment was made due to the opportunity to on-board new customers at an attractive ROI. This makes sense to me as Plus500 needs a steady stream of new investors to replace those who stop trading for various reasons. As a result management are confident about the outlook although no guidance is provided. So I think that analyst forecasts for a halving of profits in 2021 are perhaps too pessimistic even if volatility falls compared to last year. (Update)

Gamma Communications

I've held Gamma for a few years now and over that period they've been a very steady performer with no nasty surprises. This update continues the trend with adjusted EBITDA and EPS to be slightly ahead of market expectations. Usefully the update spells out the consensus ranges which are EBITDA £73.9m - £76.0m and EPS 47.0p - 51.0p. As a result broker expectations have been raised again to 50.4p capping a 22% rise in the 2020 EPS forecast over the last 18 months. Curiously this is slightly less than 51.0p even though the company will deliver slightly more than this. Make of that what you will. Since Gamma provides communication services it's been ideally positioned to support businesses working remotely. Demand has remained strong, with Gamma moving into the European market, and cancellations and bad debt have remained at the low levels experienced historically. An additional marker of quality is that net cash is almost unchanged, at £48.4m, despite a spend of £48m on acquisitions. A great result for the year. (Update)

Alpha FX

It's fair to say that the directors at Alpha FX proved their mettle in 2020. After a promising start last year it looked, for a moment, as if Alpha FX might fail when their largest customer defaulted at the point of maximum market volatility. Fortunately the business had enough resilience to take the blow and with a recovery plan in place the business has powered onwards. In fact it's done so well that analyst forecasts are back to pre-Covid levels following one massive downgrade and a number of upgrades. Given the unhelpful backdrop of lockdowns and Brexit, which cut international trade levels and a need for FX, this is a remarkable result. A few factors drove this recovery. FX risk management slowed in H1, but grew strongly in H2 as trading activity recovered, while alternative banking solutions delivered growth throughout the year. In addition new sales teams in Canada and Amsterdam performed well which suggests that the business model is robust. In fact I believe that this model, and the corporate culture, explains much of the success of Alpha FX with a focus on training new sales staff alongside more experienced team members. Since this is unlikely to change I can see why Morgan Tillbrook, CEO, expresses confidence for the future. (Update)

Games Workshop

When I skimmed across these half-year results at 7am I almost fell off my chair. For earnings to rise 55% on a 27% increase in sales demonstrates excellent operational gearing despite a small drop in royalties (which are essentially pure profit). Behind this rise it's no surprise that retail sales fell 19% but this was more than offset by trade sales jumping 34% and online sales leaping 88% (putting these ahead of store revenue for the first time). The actual numbers are quite something too since an EPS of 226.1p is already 65% of the current FY forecast for 345p (which has already been upgraded multiple times). Given little H1:H2 bias to previous results I expect brokers to upgrade yet again once they've digested these results. Right now I would expect to see ~400p for the year (rather than a simple doubling of H1 to give 450p) because the company seems to be having a little trouble meeting demand and possibly sales have slowed a little in December. I say this because the 'out of stock' metrics are higher than expected and December sales were only broadly in line. I absolutely don't read anything into this, given the continued expansion in manufacturing capability and a track-record of growth, but even Games Workshop isn't perfect. It's just honest. There are stronger and weaker elements in all businesses and from the narrative of these results it's clear that the board are happy to share the details, within limits, with shareholders. I appreciate this openness as the board have a clear desire to continuously improve the company and it is this drive that has led to the current levels of success. It's well deserved in my opinion. (Results)

Boohoo Group

Online shopping has been the place to be over the last year and Boohoo has been a huge beneficiary of the switch from the High Street. This wasn't necessarily a given at the start of the pandemic as much of Boohoo sales are supposedly driven by customers going out on the town. In practice this just isn't the case and growth rates across all territories have remained astounding. Notably sales in the USA have risen by 67% over the last ten months, to become second only to the UK, despite the lack of warehousing across the water. With UK warehousing being further extended management seem happy to continue supporting foreign sales from here. As a result of the continuing sales strength the board are raising guidance from 28-32% sales growth to 36-38%. With the adjusted EBITDA margin remaining around 10% that jump in revenues should mostly filter down to the bottom line. This performance comes despite cost headwinds related to Covid-19, higher distribution costs and the efforts being put into improved corporate governance. From here it seems that the knockout growth of previous years is continuing and that the group is starting to look reasonably priced. For the patient investor I suspect that the current price will have presented a great opportunity in years to come. (Update)

Best of the Best

I thought that the Games Workshop results were good but these are extraordinary. After moving to an on-line model we have sales almost tripling to £22.1m and profits near enough quintupling to £6.8m. I was expecting Best of the Best to have done well in the six months to 31st October, even if this wasn't peak lockdown, but this performance is beyond my wildest dreams. What's funny, in retrospect, is the EPS for H1 is a mighty 59.84p which represents 86% of the current FY forecast of 69.8p. I can see the consensus being raised to at least 100p which puts the company on a P/E of ~22 even after the price rising 50% in just the last few days. It's still not over-priced in my view since management are aiming to accelerate growth through enhanced content and increased marketing while benefiting from a reduced cost base. What's very clear is the board are investing in their website and looking to grow the user base through the addition of iOS and Android apps. Underlying this is their customer database and knowledge of how people interact with the competitions on offer. This is a valuable commodity and you can see why the formal sale process continues (despite a lack of resolution). I continue to suspect that price remains a sticking point and possibly buyers were waiting for BOTB to become a pure online operation (which it is now). The only problem with BOTB is that its shares are very tightly held and there's very little free float. Still you can't say the the directors aren't aligned with other shareholders! (Results)

Caledonia Mining

This is a strong Q4 production update from gold miner Caledonia with 15,012 ounces produced. This takes annual production to 57,899 ounces which is at the top end of expectations. Next year the target is 61-67,000 ounces and I suspect that this is conservative. More than this I like management with a track record of saying what they are going to do and then executing on this plan for year after year. This tells me that they are able stewards of my investment. For sure the company can't control the gold price but for the factors that are within their purview I know that the directors are on their A-game. (Update)


Three months ago the board raised their guidance, again, from an adjusted operating profit of at least £23m to between £28m and £30m. A big jump and the shares gained around 15% on the news. Now we learn that profits will be at the top-end of this range and so £30m is a racing certainty. This is a tremendous result and while demand remained high, because consumers were stuck at home with time on their hands, this follows an equally excellent performance in 2019. So Luceco isn't simply a Covid-19 beneficiary. Management here have worked hard to grow the business and this momentum is carrying forward into 2021. It's true that there are raw material cost pressures, and management reference a more challenging inflationary environment, but they have made significant margin gains and aim to defend them. It's certainly easier to do this from a position of strength. In fact with production and sea freight capacity unable to fully meet exceptional demand my main concern is that they don't lose business through items being out of stock. From here forecasts for just 8% EPS growth in 2021 feel very light. I suspect that analysts need to feel that last year wasn't a one-off before upgrading their numbers. (Update)


It's been a great year for Team17 which is why they're able to report that sales and profits will be ahead of the Board's expectations yet again. You just need to look at the analyst consensus graph over the last year, with its steadily rising slope, to see how consistently the business has performed. Still this is an open secret with the shares being richly rated on a P/E of 40-45. However if earnings rise by 25% next year (more than the forecast of 7.5% but a conservative guess in my view) then the P/E falls to ~35. Still high but hardly ridiculous for a high-margin, capital-light business in a growing sector such as gaming. Of course the board remain cautious for 2021, citing the lack of a one-off lockdown boost and supply chain challenges for gaming hardware, but this is in their nature. I prefer to focus on their solid release pipeline for the coming year with successful titles moving onto new platforms while a number of new games are ready to go. With Codemasters being taken over there aren't many listed computer game companies left on the UK market. Fortunately Team17 remains and it's a great company in its own right. (Update)


Another solid update from this technology partner serving large corporate and public sector organisations. It seems that adjusted PBT will be in excess of £195m which should lead to an EPS of 122-123p ceteris paribus. This is a further upgrade from their unscheduled December trading update and suggestive of a business that is delivering value to its customers. Critically the group saw strong growth in Technology Sourcing product sales into the public sector and services based customers as opposed to customers in the manufacturing and industrial sectors where spend slowed materially. Margins improved, due to better staff utilisation and a significant reduction in travel costs, allowing profits to grow more quickly than revenues. While some of these benefits may reverse the positive momentum seen in trading since the start of the pandemic shows no sign of abating. As a result the board are as confident as they can be at this stage that 2021 will be a year of progress for the Group. This is more positive than the outlook statements for both 2019 and 2020 (and they were very upbeat) which suggests to me that 2021 will turn out well. How analysts can believe that profits will remain flat over the next couple of years beats me. (Update)

Kainos Group

The shares of Kainos have been drifting down for a few months. This makes sense given the lack of news flow and fairly punchy rating. Fortunately continued momentum in the business has driven a strong trading performance and results for the year should be ahead of current market consensus expectations. No numbers are given but a particular highlight of the narrative is that they continue to work on several substantial, long-term engagements as part of the UK Government's digital transformation programme. Being part of this is huge for the business as it provides stable, extended revenues and demonstrates the value of the group to other clients. There will undoubtedly be challenges in the future but the board are confident in their strategy and this confidence is well deserved. (Update)

Belvoir Group

Management at Belvoir have excelled themselves in 2020 with tight cost control and consistent support for their franchisees. Everyone worked harder and smarter than ever with Management service fees (MSF) growing despite the sales lockdown and financial services up 13% despite a fall in mortgages. As a result trading for the year exceeded pre-Covid-19 expectations with revenue up 12%. This growth kept on going to the bottom line and results will be comfortably ahead of management's expectations. This outcome demonstrates the resilience of the business model with letting income (60% of gross profit) stable and sales income able to flex with supply and demand. Unlike some companies Belvoir is highly cash generative. So much so that net debt has fallen from £6.9m to £3.7m, all Government support has been repaid, staff have been reimbursed for any salary sacrifice and catch-up dividends are being paid to reward shareholders. I'm not surprised that Belvoir have managed 24 consecutive years of profit growth and yet the shares are priced at a P/E of 12 with a 3-4% yield. Perhaps you could argue that 10-20% EPS growth every year isn't enough to deserve a higher rating but if my portfolio did that year in, year out then I'd be very happy. (Update)

Fonix Mobile

This is a recent listing to it's reassuring to receive a steady update with no surprises. The business is growing comfortably at the top and bottom line with gross profit up 21% compared to the previous H1. With strong underlying cash-flows, a hallmark of the business, there should be a maiden interim dividend declared with the results. All three business segments are growing as expected and new customers are joining from the media, charity, gaming and digital services sectors. On a P/E of ~20 the business does not look expensive and still offers a fair amount of upside. (Update)

Sylvania Platinum

Production volumes remained strong in Q2 at 18,363oz vs 17,972oz for Q1. This is an impressive result given the level 3 lockdown in SA and continuing power supply issues (due to vandalism!). This is a testament to the operational abilities of the company with the target production for the year remaining at ~70,000oz. A useful tailwind is the PGM basket price with this increasing 17% from $2,834/ounce in Q1 to $3,323/ounce as a result of the continued increase in the rhodium price during the past quarter. Inevitably this basket price will remain volatile but news reports are fairly consistent in saying that demand for these metals will remain strong due to the growth in battery production for electric vehicles and other industrial uses. So Sylvania appears to be in a bit of a sweet spot and it's clear that management are capitalising on this by pushing forward with operational improvements. These include ongoing circuit optimisation at the new Lannex mill which will improve processing efficiencies and profitability based on current feed sources. There is also the Mooinooi chrome proprietary processing modifications and optimisation project which remains on track to commission during Q3. Both of these will allow the company to improve their feed grades and how much metal they are able to extract. It all looks very positive and with PGM prices remaining high we can look forward to a windfall dividend in short order. (Update)

Disclaimer: the author holds, or used to hold, all of the shares discussed here

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